Saturday, October 3, 2009


Human Action Cannot Be Predicted

I can't predict my actions, so I really doubt that anybody else is going to, anytime during my lifetime.

For example, I just about never give money to panhandlers; in fact I once wrote an LRC article titled, "Stop Giving Money to Bums!" My argument was that you're not helping them by making their lifestyle tenable. If you're worried about someone starving to death, you can offer to walk into a store with the person and buy the food s/he picks out. (I've done that on a few occasions. Sometimes the people will come up with a reason that they don't have time for you to buy them food! Other times you end up buying someone a bunch of food, which makes you feel a lot less like a sucker.)

But for some reason, tonight I ended up giving a guy $5. Here's how it went down: I was walking around the lovely Greenville downtown, fresh from a fabulous performance at the Mises Circle. A guy comes up to me and says, "How you doin'? No offense sir, but you know who you look like? You know Seinfeld?"

So I say, "Yeah I do look like him. 'George is getting very angry, Jerry!'" (I do a decent George Costanza.)

The guy cracks up and says, "Hey, you like honesty right?"


"Hey man, can I get a few dollars? I want to get a cold beer, you know, I'm just being honest with you."

"Okay." I decided I would give him $3, but I only had one single so I gave him a $5. When he saw the denomination his eyes lit up and he gave me a Denzel Washingtonian, "My man!"

So I made white people and black people happy today.* My work is done here.

* Argh, I keep forgetting that subtlety doesn't work on the Internet. In case you are horribly offended, the point of my joke wasn't, "Panhandlers are black." The joke involved the fact that the particular guy was obviously black, what with my reference to Denzel Washington etc. And then I was actually making fun of the Mises crowd, in the sense that I believe they were all white.

Bob, I attended the Mises presentation in Greenville Saturday and came away with the same observation. It was a large crowd, completely filling a large ballroom and, except for one asian face, all white. At my table only one was from the local area and one had driven 8 hours to attend. Everyone was very polite and interesting conversation reigned.The racial mix reminded me of Tyler Cowen's putdown of Ron Paul and the Mises Institute's connection to the Old South.

While I enjoyed all the speakers, I have been a Libertarian too long to get all fired up by Tom Woods. I think I have permanently lost my hope that freedom will ultimately prevail. I really went to hear you speak and I did walk away with new understanding. Your point that the Fed paying interest on reserves will ultimately create more reserves and a bigger future inflation was good. The problem you have not really addressed is when that inflation will begin. And you seem to ignore that deflation is actually in full force now. I was hoping to have the opportunity to pose questions at the presentation, but since that was not encouraged due to limited time would you address it on a future post. I may have missed you already doing so. The question is this. It requires the use of those bank reserves in the form of new loans to create inflation. Not only is that not happening now, but loans are declining at a rapid rate. The YOY change in M2 is a reflection of that. This is deflation and can be easily confirmed by the change in the populations attitude towards debt. Banks are afraid to lend and consumers and businesses have to much debt now to take on more. Can the government debase the currency if old debt is being destroyed in value and new debt is not being created?

The value of any economic theory should be its ability to explain and forecast. Austrian theory does a very good job of both. However, many solid purveyors of Austrian thought and several very good economists, who nailed the onset of the correction in 08, are predicting deflation not inflation. Is this just a timing disagreement?

You seem to be advocating inflation in the immediate future and trying to identify signs of it now. If you are incorrect your followers will make major investment mistakes. Your advocacy of gold ownership should be a great call. Gold will probably work better in deflation than in inflation.

Again, I enjoyed your presentation and I appreciate this blog.
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